Upcoming December 2024 Mortgage Rule Changes

As of Sept 16, 2024, the Government of Canada announced changes to the insured mortgage rules starting December 15, 2024

These changes include the following:

• Increase to the insured mortgage price cap from $1 million to $1.5 million

• Expanded eligibility for insured 30-year mortgage amortizations for all first-time homebuyers and to all buyers of new builds

• No more stress test when switching mortgage lenders

Does this impact me?

Are you looking to buy a house priced at less than $1.5 million, or have an insured mortgage already? Then yes!

Increase to the insured mortgage price cap

Previous rules meant any property priced over $1 million required a 20% down payment. Now, you can buy a property with less than 20% down as long as it is sold below $1.5 million.

In the Greater Toronto and Greater Vancouver regions, changes will likely spur increased demand for townhouses, which are generally priced in the $1.0 to $1.5 million range, and while temporarily decreasing demand for condominiums in this area as buyers seek to increase their purchasing power. If you are looking to purchase a condo, now is an excellent time to buy!

More competitive rates in this range are also expected as insurable mortgage competition heats up, which helps consumers pay less interest and save thousands over time.

Note that for insured (not insurable mortgages), you will be required to pay a one-time premium up to 4% of your total loan. The payment is part of your mortgage and you do not need to pay it right away. However, a benefit of this insurance is providing access to lower rates as lenders can take on less risk.

Expanded 30-year mortgage amortization eligibility for insured mortgages

Although it is currently possible to get a 30-year mortgage amortization (how long it will take to pay off your house) for a conventional (non-insured) mortgage, it wasn't possible for most insured mortgages.

This rule will make it easier for first time home buyers to enter the market by increasing their qualification amount and reducing their monthly payments.

The government also hopes to increase demand in the new build category, therefore increasing supply in the market. However, the effects of these changes are unclear as new builds typically require deposits upfront. Our team specializes in pre-construction properties, with an extensive list of builder partnerships, and can help you secure financing for new builds.

What to keep in mind with this new rule? By increasing your amortization to 30 years, you will pay more interest. Talk to our specialists to get an exact calculation breakdown.

No more stress test when switching mortgage lenders!

This change is huge, especially as interest rates have gone up in the last few years. Previously, most mortgage renewal offers were significantly higher since lenders knew borrowers may not have been able to pass the stress test with another lender. Now, you only need to qualify at your contracted rate, which means it's much easier to shop around for better deals. With many renewals coming due in 2024 and 2025, this will give owners much more opportunities to get cheaper rates. Talk to our specialists now!

Still have questions?

Our team is constantly evaluating the impacts of these new rules on the real estate and financing marketplace, and can break down the effects of these changes on your ability to afford and pay for your home. Contact us to find out more!